On Populist Track, Income Tax Slabs Raised

New Delhi: Finance Minister P Chidambaram announced major – and arguably populist – changes in the income tax slab.

The threshold of exemption for all income tax assesses has been raised from Rs 1,10,000 to Rs 1,50,000.

The minimum benefit to a person with an annual income of Rs 1.5 lakh at the threshold will be around Rs 4,000.

New tax slabs will be:

* 10 per cent for 1,50,000 to 3,00,000

* 20 per cent for 3,00,000 to 5,00,000

* 30 per cent above 5,00,000

Threshold for small service providers has been raised from Rs 8 lakh to Rs 10 lakh.

For women, the income tax limit goes up from Rs 1.45 lakh to Rs 1.80 lakh.

An additional deduction of Rs 15,000 under Section 80D has been allowed to an individual who pays medical insurance premium for his/her parents.

Senior Citizens Saving Scheme 2004 and the Post Office Term Deposit Account have been added to the basket of saving instruments under Sec.80(C) of the Income Tax Act.

Chidambaram also introduced an additional deduction of Rs 15,000 for taxpayers towards payment of medical insurance for parents. This would be in addition to the Rs 1 lakh limit for savings under Section 80C of the Income Tax Act.

PC On Poll Mode; Waives Farm Loans, Ups Tax Slab

New Delhi: Finance Minister P Chidambaram on Friday presented a Budget which waived off loans worth Rs 60,000 crore to small farmers, hoped for an 8.8 percent growth and announced several social sector schemes.

Chidambaram, presenting the fifth and last full budget of the UPA government, allotted more funds on health and education.

He began his speech with concerns over inflation, which he blamed on domestic and global factors, and said the intention of his government was to make growth more inclusive with a focus on social sectors and agriculture.

"The economy is expected to grow by 8.7 percent," he said, referring to the growth for this fiscal projected by the Economic Survey tabled by him a day earlier. "But I personally think, the growth would be slightly higher at 8.8 percent."

Maintaining that keeping inflation under check was one of the “cornerstones” of the Government's policy, Chidambaram said the 11th Five Year Plan had begun on a robust note.

"Keeping inflation in check will be cornerstone of UPA government's policy," he said. "More can be done to improve inclusive growth," he said.

Best education for all

Chidambaram announced a 20 per cent hike in education budget—from Rs 28,674 crore to Rs 34,400 crore—and the setting up of more IITs and IIMs. Three new IITs will be set up in Andhra Pradesh, Bihar and Rajasthan.

Chidambaram also proposed setting up of national knowledge centres and allotted Rs 100 crore to the Information Technology sector.

“We must encourage our students to take up studies in science” and announced various scholarships for students pursuing the subject," he said

He also announced Rs 13,100 crore for Sarva Shiksha Abhiyan, Rs 8,000 crore for mid-day meal scheme and Rs 4,554 crore for secondary education scheme. With a clear emphasis on rural education, FM announced 410 additional Kasturba Gandhi Vidyalaya will be set up in backward blocks.

Axe the tax

Chidambaram announced major – and arguably populist - changes in the income tax slab. He said the threshold of exemption for all Income Tax assesses will be raised from Rs 1,10,000 to Rs 1,50,000, eliciting applause from the Parliamentarians. Personal income tax exemption slab for women will be at Rs 1.8 lakh.